Are other health systems more cost-effective than the NHS?
Overview
Measuring spending on health is a complicated business. From what you do and don’t include in your measures to the way you express spending (gross domestic product [% GDP], per capita, or per cent of national spending). The different approaches mean the results that we reach can be varied and hard to understand.
When you add the additional complexity of different nations’ health systems all having different designs and operations, it is unsurprising that it becomes almost impossible to confidently determine how UK spending compares to that of our international peers, and if we are getting comparatively good value for money.
Despite this, the NHS is often cast as a system that spends a lot of money in return for poor performance. In reality, the UK is neither the highest spender among our peers, nor the worst performer. Among the G7, the group of advanced economies to which the UK is most commonly compared, the UK is the joint lowest spender, regardless of how we measure spend.
Performance, meanwhile, is a more mixed bag. While the NHS is not a consistently outstanding performer, nor is it consistently underperforming. while the political, policy and media interests of a country mean that there will always be some degree of variation in the popular methods used to measure the performance of health systems in different countries (such as waiting lists and GP access, for example), by some standardised academic estimates, the UK actually outperforms countries such as Germany, France and Sweden.
Exploring the evidence
How we slice the pie
Healthcare is a devolved matter in the UK, meaning spending and planning on healthcare operates autonomously across the four nations, with variations in spending and performance across these independent systems.
However, when it comes to comparing the health systems of various countries, to ensure a suitable degree of comparability, a standardised system of accounting has been developed by the Organisation for Economic Cooperation and Development (OECD), the intergovernmental organisation of 38 nations responsible for producing the most comprehensive international statistics.
Under this system the four nations are combined into one UK health system. This means that when we consider the comparison of the UK to our international peers, we must combine the funding provided to and performance of each devolved administration as one single healthcare system. This is complicated to do (as illustrated in a recent NHS Confederation explainer) and only adds to the complexity of making international comparisons and seeing the full picture of where countries are ranking.
The different ways to measure spending
When we make spending comparisons, we have several options about how we might choose to represent this spending. We can look at the overall picture, representing the totality of spending in any given country within a certain year, or we may choose to examine spending based on a particular activity, or sub-sector of healthcare (primary, community, secondary, etc). 1
For example, OECD data shows that in 2022 (latest year for which we have comparative statistics) the UK spent $5,493 on healthcare per capita (adjusted for purchasing power parity [PPP]), which is 9.3 per cent of GDP when accounting only for public spending, and 11.3 per cent GDP when also accounting for voluntary insurance and the costs of healthcare borne directly by patients, often known as out-of-pocket (OOP) spending. On capital spending (averaged between 2017 and 2021), the UK spent just 0.4 per cent of GDP.
These numbers represent significant amounts of public money that have been growing as a proportion of overall public services spending for a number of years. But healthcare is an expensive business all over the world, so what do these numbers mean and how do they affect rankings when comparing the UK against the rest of the world?
What can we conclude from these statistics?
While the UK appears to have a high spend compared to our international peers, this only bears out when we compare health spending across the entire OECD and use % GDP as our metric. When we look at per capita and capital spending, the scale of UK funding compared to our peers reduces significantly. New analysis from the Health Foundation puts this into starker contrast, showing that in 2022 Germany spent 55 per cent more per capita and France 26 per cent than the UK.
With capital spending, NHS Confederation analysis has demonstrated that had the UK kept pace with the average across the EU-14 between 2010 and 2019, the UK would have invested an additional £33 billion in healthcare capital.
The UK’s high comparative spending in % GDP terms is also likely to be influenced by a combination of constrained economic growth since 2010, with GDP per capita in 2022 16 per cent higher in Germany and 26 per cent higher in the Netherlands compared to the UK; a growing population and the relative protection spending on the health service has had compared to the wider public sector during the UK Government’s austerity measures.
Figure 1 below shows the UK’s spend and ranking against international forums (using OEDC 2022 data) for $ per capita spending, % GDP spending and capital spending as a % GDP (2017-2021).
How does funding link to performance? Is the NHS really that bad?
When it comes to the quality of the healthcare system, having higher spending doesn’t automatically result in more effective and efficient services, patient outcomes, or population health. Additionally, while the UK has the sixth highest GDP spend in the OECD this doesn’t mean that it is among the six best systems; and while it has a low capital spend, this doesn’t mean that the NHS’s capital estate is among the worst. Despite this, critics of the NHS will often argue that the British public receives a poorer service than their international peers.
To get a better sense of how true this actually is, we can turn to intergovernmental organisations, like the OCED and WHO, for systematic comparisons of standardised data; as well as think tanks and academia for more focused comparisons.
Beginning with the positives, we can look at one of the most widely used international comparisons of 11 high income countries produced by the Commonwealth Fund think tank – Mirror Mirror 2021 (see figure 2).
However, it will be of concern that these headline figures show the UK is behind eight other countries for health outcomes, so let’s look at this in some more detail. The Commonwealth Fund bases its rankings for healthcare outcomes on the three sub-categories of ‘population health’, ‘mortality amenable to healthcare’, and ‘condition-specific health outcomes’. Across the ten indicators that make up these sub-categories the UK is both best (fewest deaths by suicide) and worst (30-day mortality following ischemic stroke) just once, with a range between third and tenth for all other indicators.
This variation behind the headline statistic for healthcare outcomes is indicative of the UK’s comparative performance in numerous indicators of healthcare performance, not just outcomes. We are not consistently the best or the worst system - there are instances of excellent performance and poor performance.
The OECD Health at a Glance (2023) adds to the narrative that the UK is an above average performing system in most regards. Across the 13 indicators used to measure quality and outcomes of care, the report notes that the UK performs above the OECD average on multiple measures, while similarly performing poorly in others. Often these instances of good and bad performance can be found within a single OECD indicator too. For example, to analyse avoidable hospital admission the OECD uses admissions for asthma, COPD and congestive heart failure (CHF) among the adult population. The UK is a top performer among the OECD for CHF admissions, with fewer admissions than any other G7 nation; however, the UK is significantly above the OECD average for asthma and COPD admissions.
The influence of time
In addition to looking beyond the headline figures of performance data, it is also important for us to look over the long term and not just single year comparisons. This is because many of the factors that influence quality, safety and access don’t take effect in the short term. There will inevitably be a time lag between financial or non-financial intervention into a particular area and the outcomes of this investment to become apparent. For example, improving survival from lung cancer is not just influenced by the current quality of cancer treatment and access to diagnostics provided by the NHS, but also by a range of social and economic factors that impact the entire life course of an individual and the institutions that serve them, from investment in primary research to legislation and policy designed to limit tobacco consumption. Each factor will have a time lag of years to decades before the positive results fully materialise at a system level.
The example below demonstrates that while the UK is not where it currently wishes to be compared to other health systems, improving outcomes often takes years to emerge. During this time significant improvements are potentially being made that are not always reflected in headline statistics.
Cancer performance
We can see the combination of data and time factors taking place in the OECD’s cancer data between 2000 and 2014. In 2000, the average five-year survival for lung cancer was 8.3 per cent which meant the UK had the lowest survival rate among the G7. When we look forward to the 2014 average (the last year for which we have comparative data), the UK has improved five-year survival to 13.3 per cent; however, we continue to underperform our comparators, remaining the worst performer in the G7. On the face of it, this looks like a sustained poor performance over a 14-year period; however, when you compare the improvement in average five-year survival the UK performs significantly better than the rest of the G7, with an improvement in five-year survival of 60.2 per cent, compared to 27.7 per cent for the next best performer (Canada).
While there are not international statistics since 2014, data from NHS England shows that between 2016 and 2020 five-year survival continued to increase, reaching 20 per cent.
What can we conclude from this?
Like spending, the performance of our healthcare system appears better or worse depending on how we measure the same set of indicators, in what level of details we choose to look, and over what time we are prepared to observe them.
The bottom line
Drawing definite conclusions on the overall performance of the NHS compared to our international peers and directly comparing this to spending is challenging to achieve in a meaningful way when using the available data alone. However, the Commonwealth Fund has attempted to do this for the 11 countries included in its Mirror Mirror 2021 report. The UK has higher overall health system performance than five nations that spend more money on healthcare, while only Australia and the Netherlands achieve better overall performance with the same, or less investment in their health services.
Ultimately though, the variation that we see in levels of spending and performance across the available data means that we can’t conclusively say if one system is better than another at any given moment in time. Instead, when it is understood where the challenges facing our system are and how the NHS is required to improve to address them, high-level international comparisons can and should serve as the basis for identifying the best overall performers, and those with the most consistent improvement as this will identify the systems from which we have the potential to learn the most from.
Read more from our series of explainers, providing facts and figures to challenge common misconceptions in health and care.
Footnotes
- 1. The OECD definition for health spending as a proportion of GDP can be found in the OECD iLibrary. ↑
